Spurred on by consumer
: and organized labor
.S.. congressional _in-
vestigating committees are
beginning to take a sharp look
_into the oil industry. The main
question to be asked: Why is
there a sudden scarcity of oil
causing high prices and long
waits in line at gas pumps?
The investigating com-
mittees want to hear the in-
dustry’s side of the story. The
mood of the American people is
that the scarcity of gasoline is
contrived by the oil industry.

They have good reason to think
that way.

The American public has not
forgotten about the so-called
oil crisis of 1973-74. The nation
then was gripped by a sudden
searcity of oil. Motorists
throughout the nation had to
wait in long lines at gas
stations. That, too, prompted
Congressmen to respond to the
public’s angry mood.

Legislation in both the House
and Senate was-introduced to
curb the power of the oil in-
dustry. :

BLAMED INDUSTRY

Much of their action, at the
time, was based upon the
findings of a Federal Trade

- Commission (FTC) report
issued in 1973. The FTC report,
resulting from a two-year
investigation of the oil in-
dustry, placed the blame
squarely upon the industry.
The study stated that the
major oil companies behaved
“as would a classic mono-
polist: They have attempted to
increase profits by restricting
output.”

And now, the history of the
1973-74 oil crisis repeats itself.
The outcries of five and six
years ago to curb or to go so far
as nationalize the oil industry
were never heeded. The oil
industry continues to hold on to

its power. Andit is aligned with
partners who have gained
great strength since they
became organized in 1960 —
the oil producing -nations
united under a group called
Organization of Petroleum
Exporting Countries (OPEC).

That the world’s oil industry
has power cannot be denied. It
is an international industry
which affects every nation in
the world. It is truly multi-
national in scope that functions
as a cartel — whereby the
major oil firms make agree-
ments over the. control of
market shares. And as multi-
national oil companies, they
have loyalty to no nation but
only to profits.

SEVEN

MAJOR COMPANIES

Although there are many
firms in the industry, only
seven companies are
responsible for over 80 per cent
of all oil production in the

world. They are Exxon, Gulf, .

British Petroleum, Mobil,
Chevron, Shell and Texaco.
Five are U.S.-based while
British Petroleum and Shell
are foreign owned.

These giants represent a
near-monopoly in the oil in-
dustry. In economic ter-
minology, they have oligopoly
control of oil reserves, trans-
portation, refining, and
marketing facilities. Accord-
ing to a 1949 Federal Trade
Commission report, the major
oil firms controlled 65 per cent
of the estimated crude
reserves in the world; 88 per
eent of crude production out-
side the U.S. and U.S.S.R; 77

per cent of refining capacity
outside the U.S. and U.S.S.R;
two-thirds of the tanker fleet in
the world, and all major pipe-
lines outside the U.S. and
U.S.S.R.

Thus, these multinational oil
giants don’t need to worry
about price competition. They
simply pass price increases on
to consumers. As one observer
put it: The global oil com-
panies act as tax collectors for
the Arab Sheiks.

And what part are the major
oil companies playing in
today’s oil crisis? The oil in-
dustry claims that the world’s
present oil shortage stems
from the revolution in Iran
which acted to curtail imports
from that nation. That’s why,
they say, oil prices are clim-
bing ever higher.

IMPORTED LESS OIL

But authoritative investiga-
tions show that the oil firms
began to import less and use up
_ its inventories prior to the con-
fliet in Iran. And there was
good reason for this.

» 1977, the oil industry
orted the existence of a
ude oil surplus throughout
> world. The Gulf Oil Cor-
ration that the sur-
/ would continue through
at a rate of 3.5 million
Seah: soiling tothe
{ > to the
d Gas Journal, the in-
" eee titys trade
ic 0

higher-priced crude to cut
prices during the first quarter
(1978) by between 1 and 30
cents a barrel . . . More cuts
were made to apply to second-
quarter sales.”

The extent of the surplus was
severe to Nigeria, the Journal
noted, which was ‘‘one of the
worst-hit countries with pro-
duction of about 700,000 barrels
daily without a market.”

It’s facts like these which
arouse wide-spread suspicion
that the present oil crisis is
staged managed by the major
oil companies. After all, when
a surplus exists and prices
begin to fall, what is the
natural reaction of near-mono-

poly firms that can dictate

supply and price? The answer

is simple. If you have the
power, you reduce the supply
in order to bring up the price —
especiallywhen demand is
great. The bottom-line of these
companies is not just to make
profits — their goal is to
maximize profits.

A recent report of the
Energy Action Educational
Foundation, a consumer
group, substantiates the oil
industry’s drawdown of sup-
ply. It states:

“Gasoline stocks, the high
levels at the beginning of 1978
plunged sharply throughout
the first half of the year, so that
by summer they had been
reduced to levels lower than
any time since the summer of
1975. They bottomed out at a
level 22 per cent below 1977 and
7.1 per cent below 1976.

“Again, no lessening in
demand had occurred to justify
these lowered stock levels. In
fact, gasoline demand was up
3.6 per cent over 1977 for the
first half of 1978, and a Oil and
Gas Journal forecast was for a
2.7 per cent increase for the
year as whole.”’

One indicator of the speed
and depth of the gasoline draw-
down in early 1978 is the
change in the number of days
of each month’s daily demand
being held in stocks:

The report revealed that 1978
ended with the oil companies
reducing their inventories,
their imports, and the capacity
utilization of their refineries.

And while that was going on
the U.S. Government followed
a policy that helped to make
matters worse. At the end of
1978 it siphoned away from the
nation’s crude oil supply an
unprecedented amount into its
Strategic Petroleum Reserve
(SPR). The reserve is the gov-
ernment’s stockpile for distri-
bution of oil in case of national
emergency.

Statistics suppled by the Oil,
Chemical, and Atomic
Workers Union tell the story:

Thus, at a time when crude
oil stocks were still high, the
U.S. Department of Energy’s
policy to greatly increase the
supply of the Strategic
Petroleum Reserve inad-
vertently helped: the oil -in-
dustry’s position to raise its
prices. The government added
to the panic by agreeing with
the oil companies that shor-
tages were due primarily to the
revolution in Iran. It also went
on record to support high gas
prices as a means to force con-
sumers to buy less.

The Energy Action Founda-
tion concludes:

“The statements from both
the oil industry and the
Government about the desir-
ability of higher fuel prices and
about the likelihood that a few
good shortages will teach the
public a lesson, taken together
with the absence of any effort
to prevent what the industry
knew was happening and the
Department of Energy
should have known was hap-
pening suggests either that
they both wanted it to happen,
or that the industry wanted it
and knew that D.O.E. would

ae or did not know how to stop
i 3 ”

‘THE WESTERN CANADIAN LUMBER WORKER

And where do the oil
producing nations under OPEC
fit into the picture? It should
first be noted why OPEC was
organized. The major oil
multinationals were so power-
ful that the oil producing
nations felt forced to band
together in 1960 under OPEC.
They did so to increase their
bargaining power and to pre-
vent the oil companies from
playing one nation off against
another. Thus, OPEC now
represents a seller’s cartel
which functions to. offset the
cartel power of the oil com-
panies.

With shortages created by
the oil companies in 1978, panic

followed. Thus, the bid for ~

imports increased greatly this
year. Demand for oil in-
creased. OPEC was quick to

11

take notice. It increased its
prices at the wellhead. It added
surcharges to the contract
price of oil and it set aside
large quantities of oil for sale
on the spot market where oil
was Selling for $40 a barrel.

Both cartels are doing very
nicely, profitwise. Is it possible
that they.are working together
to limit the use of their oil
resources to make them last
over a longer period of time?
That’s one way to maximize
their profits over a longer
period of time. Meanwhile, the
consumer suffers.

It’s no wonder then that
trade unions, consumer
groups, and some lawmakers
demand laws needed to curb
the power of the oil giants — to
bring them under control.

UFCW ACTION

SSL OEE

IWA delegates to the
Regional Convention demon-
strated their support for the
week-long boycott of Chile’s
military junta by a march
through the streets -of Van-

couver September 13 carrying -

placards protesting the treat-
ment of the Chilean people.

The boycot, called by the
CLC and the International Con-
federation of Free Trade
Unions for the wéek of Sep-
tember 9-16, was in recognition
of the 6th anniversary of the
overthrow of the Allende gov-
ernment,

Jim Kinnaird, President of
the B.C. Federation of Labour
stated that labour by setting
the week of boycott helped to
bring tothe attention of the
public the plight of the Chilean
people under the military
dictatorhip which replaced the -

legally elected government of
Allende. .-

He said that by participating
in trade with the military
dictatorship in Chile, we are
giving tacit approval for what
they did to the Chilean people
in 1973. The B.C. Federation,
he Stated, is totally opposed to
the military junta and believes
that Canada should cut all
economic aid and trade agree-
ments with the dictatorship.

pS AS ME LAUT SST I BESET]

LIGHTER SIDE

Two men were sitting at a
bar.

“Tom,” asked one ‘‘after you
drink a lot, does your tongue -
burn?’’ *

“Y don’t know, Jim,’’ an-
swered the other. “I’ve never
been drunk enough to light it.”

“ey é- ope mw - ;
LS ee ee